tuesday, 7 august of 2012

Gibson Guitar agrees to $300k penalty over disputed wood purchases


Disputed wood purchases

Gibson Guitar agrees to $300k penalty over disputed wood purchases

Gibson Guitar Corp. has agreed to pay the federal government $300,000 to resolve a criminal case that alleged the popular musical instrument maker illegally purchased and imported ebony wood from Madagascar and rosewood from India.

Gibson, represented by a team from the Washington office of Pillsbury Winthrop Shaw Pittman, entered into a deferred prosecution deal with the U.S. Justice Department, prosecutors announced today. The settlement was filed in U.S. District Court for the Middle District of Tennessee.

Gibson will pay a $300,000 penalty, in addition to a $50,000 community service payment to the National Fish and Wildlife Foundation to promote environmental conservation. The settlement also requires Gibson, a privately held company, to set up a compliance program to bolster controls and procedures. Gibson was required in the deal to withdraw its claim to wood that the authorities seized in the course of the criminal investigation.

"[G]ibson has acknowledged that it failed to act on information that the Madagascar ebony it was purchasing may have violated laws intended to limit overharvesting and conserve valuable wood species from Madagascar, a country which has been severely impacted by deforestation," Assistant Attorney General Ignacia Moreno of the DOJ environment and natural resources division said in a statement.

A lawyer for Gibson, Pillsbury white-collar defense litigation partner William Sullivan Jr., did not immediately comment this morning on the settlement. Sullivan represented Gibson with Pillsbury partner Donald Carr, who practices in environmental law and land use.

DOJ lawyers, including John Webb, a deputy chief in the criminal division for the U.S. Attorney's Office in Nashville, said the government agreed to a deal with Gibson in part because of the company's voluntary disclosure of certain information and the company's cooperation in the investigation.

The Lacey Act makes it a crime to import into the United States any wood that has been harvested in violation of the laws of another country. An exporter in Madagascar did not have authority to export ebony fingerboard blanks after a law passed there in 2006. Gibson, based in Nashville, had purchased Madagascar ebony for the use of manufacturing guitars.

Gibson's chief executive officer, Henry Juszkiewicz, in public statements criticized the government raid last year. "It's baloney," he said in a report in The New York Times. "It seems they are gunning for us. They are just looking for us to make a mistake or do something wrong."

(Published by BLT - August 6, 2012)

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